New Delhi, Nov 29 (EFE).- Singapore Airlines (SIA) and India’s Tata Sons announced on Tuesday the merger of Air India and Vistara, two of the south Asian country’s leading Indian airlines.
The merger includes a $250 million investment by SIA in Air India, which would give the Singapore firm “a 25.1% stake in an enlarged Air India group with a significant presence in all key market segments,” the company said in a statement.
SIA and Tata aim to complete the merger by March 2024, subject to regulatory approvals
SIA said it intends to “fully fund this investment with its internal cash resources,” which stood at $12.7 billion as of Sep.30, 2022.
SIA and the Indian firm, part of the powerful conglomerate Tata Group, also “agreed to participate in additional capital injections, if required, to fund the growth and operations of the enlarged Air India” over the next two fiscal years.
“Tata Sons is one of the most established and respected names in India. Our collaboration to set up Vistara in 2013 resulted in a market-leading full-service carrier, which has won many global accolades in a short time,” SIA’s Chief Executive Officer Goh Choon Phong said in the statement.
SIA’s stake in Air India will be up to five times larger in scale compared to Vistara, and it would strengthen SIA’s presence in India, according to the airline.
Tata Sons Chairman Natarajan Chandrasekaran described the merger of Vistara and Air India as an important milestone “in our journey to make Air India a truly world-class airline.”
“We are excited with the opportunity of creating a strong Air India which would offer both full-service and low-cost services across domestic and international routes,” he said.
India is the world’s third largest aviation market, and is seen to have a very high potential for growth.
Tata and SIA estimate that passenger traffic will more than double in the next ten years, “supported by rising income levels and ongoing investments in its aviation infrastructure.”
Tata officially regained control of debt-ridden Air India, 69 years after it was nationalized, after winning the tender a year ago for about $2.4 billion.
Besides acquiring Air India, Tata also enjoyed a majority stake in Vistara and AirAsia India.
Air India and Vistara currently have a total of 218 wide and narrow-body aircraft serving 38 international and 52 domestic destinations, according to company information.
“With the integration, Air India will be the only Indian airline group to operate both full-service and low-cost passenger services,” the statement said.
“This would reinforce its position as India’s largest international carrier and second largest domestic carrier” after low-cost airline Indigo, allowing it to “compete as a leading global airline,” it concluded. EFE